Access to Care & Drug Pricing: 2018

Published on: November 20, 2018

Access to Care

The Tax Cuts and Jobs Act,
signed into law December 22, 2017, included language to repeal the individual
mandate penalty starting January 1, 2019. ASH opposed this repeal. The
individual mandate helps to stabilize the health care marketplace and keep
premiums down by encouraging more healthy individuals to purchase insurance and
thereby, spreading risk more broadly across beneficiaries. ASH will monitor the
impact of this repeal when it goes into effect.

The Administration expanded access to both association health plans
and to short-term limited-duration insurance coverage. For the latter, insurers
are now able to renew or extend short-term coverage for up to 36 months;
alternatively, the Obama-era rule on short-term plans limited the maximum
duration to three months. The concern with expanded access to both of these
types of plans is that neither have to comply with the Affordable Care Act’s
(ACA) most significant consumer protections, meaning insurers can charge higher
premiums based on health status, exclude coverage for preexisting conditions,
impose annual or lifetime limits, opt not to cover entire categories of
benefits, rescind coverage, and require higher out-of-pocket cost-sharing than
under the ACA.

Additionally, the Administration issued a proposed rule in late
October outlining new rules to make it easier for employers to use health
reimbursement arrangements (HRAs) to help workers cover medical costs. If
finalized, this rule would allow employers to provide subsidies to employees to
buy individual market coverage, either on or off the ACA exchanges. This is
another move by the Administration to expand consumer choices and lower costs
for small businesses. Employers were prohibited from funding HRAs under the
Obama Administration because such arrangements would not have satisfied the
employer mandate, which requires companies with more than 50 full-time
employees to provide health benefits.
Experts anticipate that this change may result in some employers
choosing not to offer health coverage and instead subsidizing their employees’
purchase of plans on the individual market.

With Democrats taking control of the House of Representatives in
the 116th Congress, we do not expect that there will be any further
attempts to repeal and replace the Affordable Care Act (ACA). Protections for pre-existing conditions will
remain in place unless the decision in Texas
v. United States, which would be subject to appeal, overturns them. The change in House leadership may also
revive the attempt to pass legislation that would include policies to stabilize
the individual market.

Drug Pricing

A priority for the current Administration is addressing the high
cost of drugs. In May they released
“American Patients First: The Trump Administration Blueprint to Lower Drug
Prices and Reduce Out-of-Pocket Costs.” The document identified challenges in
the American prescription drug market, such as high list prices for drugs, and
high and rising out-of-pocket costs for consumers, and provided a blueprint for
addressing these challenges. The Administration
identified four key strategies for reform: improved competition, better
negotiation, inventive for lower list prices, and lowering out-of-pocket costs.
The document also included ample opportunity for feedback. In response to the
request for comment, ASH focused
on the proposal to move some drugs from Medicare Part B to Medicare Part D. The
Society highlighted that moving drugs from Part B to Part D could increase
costs for patients because of the differing benefit designs and increase the
practices of “white bagging” and “brown bagging,” both of which cause concerns
regarding quality control, waste, and patient safety. ASH also led a sign-on letter
for State Societies on this issue.

In August, the Centers for Medicare and Medicaid Services (CMS)
issued guidance allowing Medicare Advantage plans to implement step therapy for
physician administered Part B drugs beginning January 1, 2019. Step therapy requires patients to begin on (and
fail) a less expensive treatment before being prescribed a more expensive, but
many times more effective, treatment.
ASH signed onto a letter,
led by the American Medical Association, expressing concern about this policy
change, highlighting that step therapy can harm patients and undercut the
physician-patient decision-making process.

In October, the Administration issued a proposed
rule which would require pharmaceutical companies to disclose the list price of
prescription drugs in television advertisements for any drug that cost more
than $35 a month. The list price, or wholesale acquisition cost, is the price
set by the manufacturer prior to any discounts, rebates, or financial
assistance. The public will have two months to comment on the proposal. It is
important to note that the proposed rule does not include a government
enforcement mechanism that would force companies to comply.

Finally, the Administration put forth an Advanced Notice for
Proposed Rulemaking on the development of an International Pricing Index (IPI)
Model to reduce expenditures on certain Part B drugs and biologicals. If
finalized, private-sector vendors would supply physicians, hospital outpatient
departments, and others, including providers/suppliers with the drugs that CMS
chooses to include in the model for all of the selected geographic areas, which
will represent approximately half of current Part B spending. The vendors would
acquire the drugs and bill Medicare. CMS would reimburse the vendor for the
included drugs based on international prices. Doctors and hospitals would be
able to select different vendors for different drugs. Lastly, Medicare would
pay a set drug administration payment to physicians and hospitals. The
Department of Health and Human Services hopes to put forth a proposed rule in
the spring of 2019 with a proposed start date for the model as spring of
2020. ASH is in the process of analyzing
the proposal and will be submitting comments, which are due to CMS by December
31, 2018.

Drug pricing is an area where we may see legislative action next
year. Both Democrats and Republicans
agree that the high cost of drugs in this country must be addressed. However, they have typically disagreed on how
to accomplish this with Democrats generally supportive of providing Medicare
with the authority to negotiate drug prices.
Both parties are more likely to agree on policies that will facilitate
the development of lower cost generic drugs.